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Nokia, Is It Sentiment Manipulation or Grassroots Love?

A quick note on some potential astroturfing seen here on Forbes, Motley Fool and Barron’s over the past few days. Astroturfing is the practice of organized comments on social media sites, detectable largely by identical text.

In this case, the astroturfing relates to Nokia and involves extensive comments (CLARIFICATION: extensive identical comments, many coming from the same IP address in a form that sometimes is called astroturfing, the practice of creating an appearance of grassroots support) in favor of the Finish company and its products. See the texts below and see this article for NPR coverage of political astroturfing.

Identical comments appeared on a number of sites over the past five days (The Times of India is another) all with identical text but with different commentator names. In the case of the comments on my post, the different names also come from the same domestic IP address.

I don’t have time to research it exhaustively but there are some examples below.

The purpose could be benign. A few grass roots followers who want to show their support for Nokia. Or it could be aimed at influencing overall sentiment, though that would take a large effort. As it is the comments appear mostly on investment related sites.

Beside Verizon news, which is of course very important for North America markets and Wall Street, for example in China regarding Gartner´s report, WP phone sell is going to pass 10 million units worldwide this quarter alone. In Finland, with national TV interview, even though CEO Stephen Elop did not say how many units of Lumia 920 have been sold, but he thanked shareholders and people who have supported Nokia through difficult times. He also said all the hard work has been worth it and the company is starting to see ray of light and the effort has been now fruitful.

Nokia is a stock to own with great upside opportunity right now, I have to say there are many more factors that have driven Nokia lately and into the future. Beside Verizon news, which is of course very important for North America markets and Wall Street, for example in China regarding Gartner´s report, WP phone sell is going to pass 10 million units worldwide this quarter alone. In Finland, with national TV interview, even though CEO Stephen Elop did not say how many units of Lumia 920 have been sold, but he thanked shareholders and people who have supported Nokia through difficult times. He also said all the hard work has been worth it and the company is starting to see ray of light and the effort has been now fruitful.

Nokia did announce a couple of months ago (when asked why it bought Norway´s Smarterphone but has not used the OS) that Nokia bought Smarterphone because of the company´s expertise, in order to develop Nokia´s feature phones which are going to be kind of half smartphones right now, e.g. the newest Asha 205 and Asha 206, in which there are features like Facebook, Twitter etc and internet access to thousands of Nokia´s most popular apps.

Either Nokia has integrated Smarterphone into S40, we don´t know, but the fact is Nokia´s feature phones have become really smarter!

Nokia did announce a couple of months ago (when asked why it bought Norway´s Smarterphone but has not used the OS) that Nokia bought Smarterphone because of the company´s expertise, in order to develop Nokia´s feature phones which are going to be kind of half smartphones right now, e.g. the newest Asha 205 and Asha 206, in which there are features like Facebook, Twitter etc and internet access to thousands of Nokia´s most popular apps.

Either Nokia has integrated Smarterphone into S40, we don´t know, but the fact is Nokia´s feature phones have become really smarter!

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According to Nokia´s factory in Beijing, which is the biggest factory of Nokia, is producing 600 000 Lumia 920s a month. It also produces other Lumia phones, therefore the number is 2 million Lumia phones a month.

Then, the other 6 Nokia factories have capacity about 1/4 of the Beijing factory each. In addition, Taiwanese Compal is still producing older Lumia phones at the same time!

According to Digitimes, Nokia will also launch tablet at MWC next year.

Nokia is also planning a lot of interesting things with Verizon, according to CEO Stephen Elop.

Nokia now has low end competitive Asha phones and high end competitive Lumia phones. Apart from that, Nokia has other business units like Navteq, NSN and intellectual property rights.

Nokia´s EPS in last quarter was -0.07 euro per share any more, and if Nokia´s EPS breaks even this quarter or becomes positive, then the markets will no doubt choose Nokia as the certain third horse in the race. That will show a huge surge in the stock price, because for example short sellers will have to buy back.

The reasons are quite simple, because when RIM still need to use money to launch BB10, it means WP8 is already making money.

And during 1Q13 when RIM gets BB10 phones out, Nokia will have already a lot more to come at MWC. Additionally, that “a lot of interesting things with Virizon” that Stephen Elop mentioned, will already take place step by step.

The conclusion is, Nokia and WP8 are in a significantly bigger step ahead of RIM and BB10.

Nokia, which has come down more than 90% from its highest, is really worth consideration.

Feature phones Asha 205 and Asha 206 belong to Nokia´s “next billion people to reach internet” strategy. This is a big chance. There are still many many people out there using feature phones, especially in developing countries.

In these phones, there are Facebook, Twitter etc, and also 40 most popular games in the world for free. All packed in a $60 phone without any contract. Therefore, I think it is quite hard for other manufacturers to compete featurephones with Nokia.

And the featurephone division in Nokia has been profitable, because of this Asha family. Therefore, Nokia´s 3.6 billion euros net cash, plus NSN, Navteq, patent portfolio and featurephones (all these 4 divisions have been profitable) are giving enough time for Lumia phones to take off (pushing them with huge marketings, discounts and campaigns). And Nokia´s EPS was -0.07 euro any more last quarter, when Lumias were sold 2.9 million units. And now, even Street estimation is above 5 million units. Kantar just reported WP phones have reached 11.7% in Italy. The WP phones most sold there are Lumia 610 and Lumia 800.

Yahoo-China reported a few weeks ago that Lumia 920 alone was ordered from Nokia up to that date 2.5 million units. And Lumia 920 still sells out in most of the countries launched. Lumia 920 and 820 also support Arabic now, which meas WP8 phones will arrive to more markets.

In addition, China Mobile (the world´s biggest carrier with about 700 million subscribers) is selling Lumia 920T soon, starting December!

Lumia 920 has repeatedly sold out in many countries, such as: Italy, Germany, Australia, US, UAE and so on. A few days ago, this also happened in France, Sweden and England.

Nokia´s current 3.6 billion euros net cash should be enough for Nokia´s transitional period before WP8 phones take off.

Nokia is also getting more cash from convertible bonds and selling its headquarters and other non-core assets.

1. Nokia Siemens Networks is profitable and growing strongly (over 300 million euros profit in 3Q). Nokia and Siemens have decided to make it independent in these few years, therefore Nokia shareholders will have two companies´ shares in their hands, quite a good bonus.

2. Navteq is profitable as well, and it is expanding its business as the world´s leading maps maker, with City Lens and Earthmine´s 3D mapping, Nokia will have a bigger slice of this pie yet.

Right now, Navteq already has big clients such as Yahoo, Facebook, Amazon, Mozila, Oracle and almost countless car companies. Navteq just reported it is building navigators into 4 out of 5 cars (80%), with the new cars with navigator built in.

5. The only 1 out of 5 Nokia´s business parts, which is not profitable, is smartphone business, but new Lumia generation looks promising.

Lumia 920 has features like:

Floating-lens PureView camera with optical image stabilization

Wireless charging

Super sensitive and bright screen that can be used with gloves or finger nails

Premium GPS that can be used also without internet

Augmented reality City Lens!

Free music with no ads

NFC

Rich sound recording in vids

Fastest screen on a smartphone!

Wireless Purity Pro headphones

Wireless speaker that can charge your phone wirelessly

LTE

Nokia also bought Scalado, the imaging technology firm in Sweden. Therefore, apart from NAVTEQ and NSN, Nokia is no doubt going big with PureView imaging technology. Some authors compare Nokia to Kodak, I think it is almost the opposite.

Kodak was the old era and Nokia is starting the new evolution with smart-phone imaging, when consumers won´t have to carry another gadget (camera), for example during traveling.

6. Considering now the total loss is about 17 million euros, it got much better from the 290 million (2 prior quarters each) loss.

Nokia´s current 3.6 billion euros net cash should be enough for Nokia´s transitional period before WP8 phones take off.

Nokia is also getting more cash from convertible bonds and selling its headquarters and other non-core assets.

Morningstar´s analysis about Nokia:

Estimated price: intellectual properties over 1 euro per share; other business parts (smartphones, featurephones, NSN) at least over 1.50 euro per share.

And NAVTEQ´s price not included (Nokia bought NAVTEQ with 5.7 billion euro). All in all, even in this case, Nokia share price would be at least over 2.50 euro, excluded NAVTEQ! And Nokia´s net cash is now 3.6 billion euros.

In other words, the sum of parts of Nokia and net cash are worth much more than its market cap now, which means NOK share is right now heavily undervalued.

7. Nokia´s 3.75 billion shares outstanding,

covers both Helsinki and New York.

In other words, the short interest in NOK has been around 20% (Helsinki + New York) on a base of 3.75 billion shares.

This is a significant figure to note, because for example, shares of Apple have been short sold only about 0.5%, Samsung over 2% and other telecom companies about 4% in general.

Therefore, the real short covering of NOK is still to come yet.

8. The only 1 out of 5 Nokia´s business parts, which is not profitable, is smartphone business, till now.

And the EPS in last quarter (3Q12) was only -0.07 euro per share any more.

A few days ago, Yahoo-China site said that it has the approximate number of Lumia 920 that has been ordered from Nokia up to date, and it was about 2.5 million units. And this number of Lumias 920 alone is already close to the total number of all the Lumia variants sold in last quarter, 3Q12, which was 2.9 million units only.

Apart from Lumia 920 and 820 variants, Nokia has been pushing at the same time the sales of Lumias 510, 610, 710, 800 and 900 with campaigns and discounts.

For example, Lumia 800 has gone back into top ten charts in many countries.

ABG Sundal Collier said in their report that the Lumia 920 makes people interested in it and marks the comeback of the brand of Nokia.

Liberum upgraded NOK from “hold” to “buy”.

Nordea has raised NOK´s price target.

RBC kept their “Market Perform” but raised target.

Northland Securities raised price target.

Also UBS and Jyske Bank raised price target.

Nokia launched Asha 205 and Asha 206.

In these two new Asha phones, Nokia has a new innovation called “Slam” with which you can share photos and videos between the phones, and don´t have to even pair them up like NFC. Also Facebook etc and 40 most popular games in the world are in these phones, which make it hard for manufacturers to compete featurephones with Nokia.

Nokia´s WP8 phones will be available in more markets, because they also support Arabic now.

China Mobile (the world´s biggest carrier with about 700 million subscribers) has also confirmed Lumia 920T arriving December!

A few days ago, Bloomberg’s Adam Ewing wrote that Nokia (NOK) may have an advantage over Apple in Europe because the “Lumia” line of phones running Microsoft‘s (MSFT) Windows Phone 8 operating system works on two dozen different 4G networks using “long term evolution,” or LTE speeds, while the iPhone 5 only works on two networks. Ewing quoted some shoppers who said they went with a Nokia because LTE was a must in their smartphone purchase.

Actually, beside China Mobile, China Unicom is also selling Lumia 920 (the version like in Hong Kong).

That means 2 out of the 3 biggest carriers in China are selling Nokia´s flagship phone!

The world´s second largest carrier Vodafone´s chief Vittorio Colao said a few days ago that Nokia is back on top with innovations. He mentioned especially Nokia´s camera technology and maps combined with augmented reality: PureView camera with optical image stabilization and Augmented reality City Lens.

By the way, Verizon is Vodafone´s affiliated or branch company.

The world´s biggest carrier China Mobile (with about 700 million subscribers) starts to sell Lumia 920T before the end of the year. Nokia and China Mobile had co-launch party in Guangzhou China a few days ago.

Lumia 920T´s processor is said to be the fastest in a smartphone in the world.

The chief of China Mobile said Nokia and China Mobile have worked together since the 80´s. China Mobile has about 700 million subscribers, and in average, one subscriber buys or changes a new phone every 23 month. That means China Mobile sells about 350 million phones per year.

Nokia also launched Lumia 620. It is the most affordable WP8 phone up to date, and it will hit the markets early 2013.